Caracas, July 16, 2023 (venezuelanalysis.com) – Venezuela’s oil sector continues to recover production and exports as it reactivates crude upgraders and expands its customer list.
The latest OPEC monthly report placed the Caribbean nation’s June crude output at 767,000 barrels per day (bpd), as measured by secondary sources. The figure rose from 743,000 bpd in May. For its part, state oil company PDVSA reported a higher number of 796,000 bpd, down from 819,000 bpd the prior month.
The present output is the highest registered since early 2020 and has slightly surpassed last year’s 690,000-700,000 bpd average. However, it remains significantly below the 1.9 million bpd pumped in mid-2017 before the first US sanctions levied against the oil industry.
For the past six years, the US Treasury has imposed financial sanctions, an export embargo, secondary sanctions and a bevy of other measures designed to choke off Venezuela’s main source of revenue and trigger regime change.
Oil exports likewise experienced a slight surge last month with state oil company PDVSA renewing contracts and signing new supply deals after almost all shipments were paralyzed during an internal audit that began in January. The freeze was ordered by Oil Minister Pedro Rafael Tellechea to address payment irregularities, which later resulted in the revelation of a corruption plot that reportedly saw US $3 billion diverted via cryptocurrency schemes. Since March, Venezuelan authorities have arrested dozens of people allegedly involved in these operations.
With sales flowing again and PDVSA bulking its buyer portfolio, the Caribbean country exported 715,933 bpd of crude and refined products as well as 294,000 metric tons of oil byproducts in June, 8 percent more than the previous month, according to Reuters.
Venezuela’s crude continues to be shipped primarily to China while Iran received about 131,000 bpd of crude and fuel oil last month in exchange for 2.1 million barrels of condensate and other diluents that PDVSA uses for refining as part of the countries’ alliance. For its part, US corporation Chevron exported some 134,000 bpd from its joint ventures, slightly less than the 150,000 bpd reported in May under the sanctions waiver granted by the US Treasury Department in November 2022.
However, exports of petroleum coke (petcoke) dropped last month to 56,000 metric tons from 620,000 tons in January, while vessels currently wait near Venezuelan ports to load. In June, PDVSA suspended a contract with Geneva-based Maroil Trading over a $423 million dispute over accounts receivable.
Maroil’s owner Wilmer Ruperti told Reuters there was no wrongdoing and claimed that instead, PDVSA owed the firm $300 million. Venezuelan authorities have not released any statement regarding the alleged unpaid shipments or debt.
In 2017, Maroil reportedly received rights to 12 million metric tonnes of petcoke, then valued at $138 million under a contract for developing a petcoke rail conveyor system in Venezuela. Since September 2022, the company has also been granted exclusive control of petcoke exports.
As a result, the country’s sales of the oil byproduct grew sevenfold between 2021 and 2022, but PDVSA is now looking to remove commercial exclusivity and has signed agreements with new petroleum coke buyers.
Despite the setbacks caused by PDVSA’s extensive audit, crude exports were almost 15 percent higher in the first six months of the year in comparison to the same period in 2022. The rise followed the restart of the 150,000-bpd-capacity Petromonagas crude upgrader, located in the José Antonio Anzoátegui industrial complex, in mid-June after being out of service since December due to a fire.
Petromonagas produced some 73,000 bpd of diluted crude last month and is the fourth crude upgrader from the Orinoco Oil Belt, eastern Venezuela, that has been reactivated as part of recovery efforts in the oil sector. The others are Petrosinovensa, Petropiar and Petrocedeno, which turn extra heavy crude into exportable grades.
The newly activated upgrader has been operated by PDVSA and Russian state firm Roszarubezhneft since 2020 when the company acquired Rosneft’s shares in all Venezuelan oil ventures after Washington imposed sanctions on two of the Russian energy giant’s units.
Roszarubezhneft is reportedly in conversations with Venezuelan oil authorities to strike a deal similar to the one PDVSA has with Chevron in order to take control of crude exports from its five joint ventures in the South American country.
The joint ventures have accumulated a reported $3.2 billion through sales that PDVSA has managed via intermediaries, but the Russian company has not received any payments. Additionally, PDVSA owes Roszarubezhneft $1.4 billion from extended loans, although the figure is challenged by Caracas.
Venezuelan legislation requires that PDVSA have control over crude oil and fuel sales in joint ventures. However, these requirements were presumedly modified in the undisclosed deal with Chevron allowing the California-based company to commercialize cargoes by itself as PDVSA is blocked by US sanctions.
The blockade against Venezuela has been heavily criticized for violating international law and negatively impacting the Venezuelan population and the region. On July 7, the Caribbean Community (Caricom) urged Washington to remove the measures against Caracas in order to reactivate the Petrocaribe alliance and alleviate the current energy crisis affecting the Caribbean nations.